PHC Treasury Limited v Settlers Honey Limited
[2025] NZHC 3259
•30 October 2025
IN THE HIGH COURT OF NEW ZEALAND WHANGANUI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGANUI ROHE
CIV-2024-483-39
[2025] NZHC 3259
UNDER part 12 of the High Court Rules 2016 IN THE MATTER
of an application for summary judgment
BETWEEN
PHC TREASURY LIMITED
Plaintiff/Applicant
AND
SETTLERS HONEY LIMITED
First Defendant/Respondent
HENRY RAYMOND MATTHEWS
Second Defendant/RespondentHENRY RAYMOND MATTHEWS, JOHN POLLING CAIN and
MELODY JUNE WALLACE (as trustees of the Makowhai Trust)
Third Defendants/Respondents
Hearing: 7 May 2025
Further memoranda as to whether judgment required completed 3 October 2025
Appearances:
S Comber and T Watson for Plaintiff/Applicant
K Sullivan for First to Third Defendants/Respondents
Judgment:
30 October 2025
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[1] On 21 December 2022, Settlers Honey Limited (Settlers), the first defendant, entered into a transaction with the plaintiff, PHC Treasury Limited (PHC). PHC was to purchase mānuka honey from Settlers for $3,000,000, and the honey would be stored by Settlers. After 13 months, Settlers would repurchase the honey for
$5,000,000. The rationale behind the transaction was to provide Settlers with
PHC TREASURY LIMITED v SETTLERS HONEY LIMITED [2025] NZHC 3259 [30 October 2025]
immediate cashflow while mānuka honey prices were low and keep honey available “for when Settlers has built up its markets”. It was assumed that the price would rise during the storage period due to a reduction in the amount of mānuka honey available. Settler’s obligations were personally guaranteed by Henry Matthews, the second defendant, and the sole director and a shareholder of Settlers. The parties were advised throughout by independent solicitors.
[2] There were four variations to the transaction. The first involved a reduction in the total amount of honey to be purchased, an increase in the purchase price to maintain the $3,000,000 payment to Settlers, and an increase in the repurchase price to $30 per kilogram. Mr Matthews also agreed to pay PHC a $500,000 “success fee” to maintain PHC’s margin. The second variation involved the success fee being replaced by a further increase in the repurchase price to $33.34 per kilogram. The price of mānuka honey did not rise as expected and Settlers were unable to repurchase the honey at the end of the storage period (31 January 2024). The third variation involved PHC agreeing to extend the storage period by a maximum of three months to 1 May 2024 in consideration for further increases in the repurchase price to $33.84 per kilogram (until 29 February 2024), $34.34 per kilogram (until 31 March 2024) and
$35.34 per kilogram (until 31 April 2024). The fourth variation involved PHC agreeing to extend the storage period by a further two months in consideration for an increase in the purchase price to $36.34 (until 31 May 2024) and $37.34 (until 30 June 2024).
[3] By June 2024, PHC had become concerned that Settlers and Mr Matthews would be unable to repurchase the honey. To address these concerns, on 4 July 2024, PHC obtained a second ranking mortgage over land owned by Nirvana Farm Limited (Nirvana) as security for Mr Matthews’ obligations as guarantor. Mr Matthews is the sole director and a shareholder of Nirvana. In August 2024, the third defendants, trustees of the Makowhai Trust (Makowhai Trustees), agreed to guarantee the performance of Settlers’ obligation to repurchase and, as security, the second ranking mortgage over Nirvana’s land was effectively swapped (in part) for a second ranking mortgage over land owned by Makowhai Trustees. Again, the parties received independent legal advice.
[4] In September 2024, Settlers requested a further extension to the storage period in exchange for an increased repurchase price for the honey and an option to purchase land from the third defendants or Nirvana, if they failed to pay the repurchase price by the end of the new storage period. PHC ultimately rejected this proposal.
[5] PHC now applies for summary judgment against the three defendants on the basis that the repurchase amount has still not been paid. I understand that the parties have been in discussions over several months as to settlement. Unfortunately, in addition to the issues before me, it is apparent there is now also a dispute between the parties as to whether settlement has been achieved. In the circumstances, PHC has requested that judgment be issued. The defendants contend that settlement has been achieved but acknowledge this is disputed, and that, in the circumstances, PHC is entitled to request judgment.
[6] A key issue is the nature of the transaction. PHC maintains that the agreement was an investment deal, because it is not a lender. PHC’s position is that the investment deal was designed to give Settlers immediate cash flow as mānuka honey prices were low and expected to rise. However, Mr Matthews’ evidence is that he understood the arrangement to be, in effect, a loan (as Settlers kept possession of the honey) which was structured as an Agreement of Sale and Purchase (ASP) to provide PHC with security. Settlers and Mr Matthews contend that the transaction is a credit contract under the Credit Contracts and Consumer Finance Act 2003 (CCCFA) which is oppressive and should be reopened at least for the purposes of determining the appropriate amount payable.1 The Makowhai Trustees contend that the arrangement for granting a second mortgage over their land forms part of the credit contract.2
[7] Settlers and Mr Matthews accept that they have a repayment obligation under the transaction but oppose summary judgment as they say they have a defence on quantum. The Makowhai Trustees oppose summary judgment in respect of both liability and quantum.
1 Credit Contracts and Consumer Finance Act 2003, ss 118, 120, 124 and 127.
2 Section 119.
Legal principles
[8]Rule 12.2 of the High Court Rules provides:
12.2Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
…
[9] The approach to an application for summary judgment by a plaintiff was discussed by the Court of Appeal in Krukziener v Hanover Finance Ltd:3
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 (CA).
[27] Under r 141A of the High Court Rules the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
[10] The notion that a defendant must have “no defence” has also been expressed as lacking a bona fide defence, having no reasonable ground or defence or no fairly arguable defence.4
3 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26]–[27].
4 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
[12]Meanwhile, r 12.3 provides:
12.3Summary judgment on liability
The court may give judgment on the issue of liability, and direct a trial of the issue of amount (at the time and place it thinks just), if the party applying for summary judgment satisfies the court that the only issue to be tried is one about the amount claimed.
[13] In Fullarton v Arowana International Ltd, this Court held that there is a reasonably high threshold to be satisfied that the only issue to be tried is the amount claimed.5 A “clear dichotomy” between the issues affecting liability and damages is required to grant judgment only on liability.6 It will not be appropriate where:7
…the summary judgment procedure… would put the Court in the position where it might make findings which would not readily be reconciled with a holding that there was no tenable defence.
Issues
[14]The issues for determination are:
(a)Is it reasonably arguable that the transaction was a credit contract?
(b)If so, is it reasonably arguable that the transaction was oppressive?
(c)Is summary judgment in respect of liability only under r 12.3 appropriate?
Is it reasonably arguable that the arrangement was a credit contract?
[15] Mr Sullivan, for the defendants, submits that there is dispute between the parties as to the nature of the transaction and this can only be properly determined after assessment of full factual and expert evidence at trial. Mr Sullivan’s submissions
5 Fullarton v Arowana International Ltd [2021] NZHC 931 at [80] as cited in Jessica Gorman and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) [McGechan] at [HR12.3.01].
6 Ghent v Brinkman HC Wellington CP379/87, 11 September 1987 as cited in McGechan, above n 5, at [HR12.3.02].
7 At 13.
in support of the view that the transaction was a loan, and a credit contract, can be summarised as follows:
(a)PHC’s behaviour indicated it was acting as a lender. Mr Matthews understood PHC to be the investment arm of the wider enterprise owned by Mr Cliff Cook and therefore, a lender providing loans to businesses who needed finance. He approached PHC for a loan of
$3,000,000 and was referred, he understood, to a Mr Panckhurst who was occupying a role akin to ‘investment manager’. The arrangement was structured as an ASP to provide PHC with security and PHC’s evidence acknowledges Settlers sought the deal for its “immediate cashflow”.
(b)The terms broadly favoured PHC. The buy-back arrangements were changed by PHC. The balance of the purchase price was delayed until March 2023, while the terms were altered to ensure PHC received a 66 per cent return on its investment, irrespective of how quickly Settlers exercised its buy-back obligation. Mr Sullivan also notes that by April 2024, the return on PHC’s investment was 76.7 per cent; while by 16 May 2024, it had reached 86.7 per cent. The price was set and amended in relation to the return on the investment by PHC rather than the market price of honey; the repurchase price was artificially changed, for example, to include a $500,000 success fee.
(c)A traditional sale and purchase would involve the purchaser taking possession or selling the honey. In this case, the honey was effectively treated as collateral to the loan and remained in Settlers’ possession. The intention of the parties never seems to have been that PHC could assert ownership rights over the goods; the honey remains stored at Settlers along with the risk and cost.
(d)The market risk was worn by Settlers, with the honey unable to be sold as the market price dropped, whilst the buy-back price was raised. In
effect, this put Settlers in the position of being unable to find a sale which ensured repayment but also with an escalating buy back price.
(e)The involvement of PHC’s agent, Mr Unkovich, particularly regarding land owned by Mr Matthews’ related company Nirvana, blurred the boundary between arms-length lender and “interested party and potential purchaser of land and even advisor or agent to Mr Matthews”. PHC has also accepted that it has been speaking to Vitol Asia Pty Ltd, from whom Settlers also secured a finance deal.
[16] Mr Sullivan submits that the use of sale and purchase agreements in a structured finance arrangement can operate as a form of common law mortgage.8 The ASP is security for the loan. He emphasises that, while PHC obtained legal title to the honey, it has at all time remained with Settlers. He submits that PHC’s interest as creditor was protected by a Personal Property Securities Register (PPSR) financing statement registered over the honey. He submits that, under s 17 of the Personal Property Securities Act 1999, a security interest is an interest in personal property created or provided for by a transaction that “in substance secures payment or performance of an obligation”.
[17] Mr Comber, for PHC, submits that the CCCFA does not apply. This is because the ASP and other related arrangements do not meet the definition of a credit contract under ss 6 and 7 of the CCCFA. In particular, none of the arrangements provide for “credit” as defined in s 6 of the CCCFA, meaning that they cannot constitute credit contracts. Mr Comber emphasises that neither party nor their legal counsel, referred to the arrangements as a loan at the time. Accordingly, pt 5 of the CCCFA, which governs the reopening of oppressive contracts, has no application.9
[18] Mr Comber relies on the decision of this Court in KBL Investments Ltd v KBL Courtenay Ltd.10 In that case, this Court held that the warehousing agreement and option deed did not constitute a credit contract, as there was no deferment of the
8 Mr Sullivan refers to Waller v Davies [2007] NZCA 51 at [72], citing Hayes Securities Ltd v Bambury [1991] 1 NZLR 304 (CA) at 307.
9 Credit Contracts and Consumer Finance Act 2003, s 117.
10 KBL Investments Ltd v KBL Courtenay Ltd [2015] NZHC 30.
payment of a debt and nor was a debt incurred with payment deferred. The property was purchased outright, and until the option to buy back was exercised there was no obligation to make a payment.11 Mr Comber argues that the transaction in the present case is analogous to KBL Investments Ltd. He notes that the repurchase obligation in this case arises at the end of the storage period, and is then immediately payable, meaning there is no deferred payment. Mr Sullivan submits that, in KBL Investments Ltd, the Court of Appeal overturned the High Court in finding that it was arguable that the warehousing agreement and option deed, providing for the purchase of a property with an option to buy back, was in substance a credit contract.12 Mr Comber submits that the reasons the Court of Appeal considered it was arguable that the agreements were in substance a credit contract do not apply on the present facts.13 Mr Comber also refers me to Hayes Securities Ltd v Bambury, in which the Court of Appeal held that a sale and purchase agreement with an option to repurchase was not “in substance or effect” a credit contract under s 3(4) of the Credit Contracts Act 1981 (the predecessor to the CCCFA).14
My assessment
[19]The relevant definitions of “credit” and “credit contract” are as follows:15
6Meaning of credit
In this Act, unless the context otherwise requires, credit is provided under a contract if a right is granted by a person to another person to—
(a)defer payment of a debt; or
(b)incur a debt and defer its payment; or
(c)purchase property or services and defer payment for that purchase (in whole or in part).
11 At [181]–[182].
12 KBL Investments Ltd v KBL Courtenay Ltd [2016] NZCA 227 [KBL Court of Appeal decision] at [77].
13 At [77].
14 Hayes Securities Ltd v Bambury, above n 8, at 309. Mr Comber submits that s 3(4) of the Credits Contracts Act 1981 is broadly the same as s 7(2) of the Credit Contracts and Consumer Finance Act 2003.
15 Credit Contracts and Consumer Finance Act 2003, ss 6–7.
7Meaning of credit contract
(1)In this Act, unless the context otherwise requires, credit contract
means a contract under which credit is or may be provided.
(2)If, because of any contract or contracts (none of which by itself constitutes a credit contract) or any arrangement, there is a transaction that is in substance or effect a credit contract, the contract, contracts, or arrangement must, for the purposes of this Act, be treated as a credit contract made at the time when the contract, or the last of those contracts, or the arrangement, was made, as the case may be.
(emphasis added)
[20] In the present case, I consider it is at least arguable that the transaction was in substance or effect a loan and a credit contract, with the sale and purchase of the honey intended to operate as security rather than an absolute sale. In KBL Investments, the Court of Appeal found:16
However, it is arguable that the warehousing agreement and option deed were in substance a credit contract. The buy-back price was calculated by applying interest and fees over the term of the arrangement, and the subsequent extension was priced as a sum per month. It was, in effect, a holding arrangement to enable KBL to refinance, subject to the payment of interest and costs. We are prepared to assume without deciding that it was a credit contract for the purposes of the CCCFA.
[21] So too in this case, I consider it is at least arguable the transaction was in effect a holding arrangement enabling Settlers to use the $3,000,000 as working capital to build up its markets. The argument here may be stronger than in KBL Investments as this is not a case where there was an option to exercise a right to repurchase within a certain period. Rather, it is arguable that Settlers had an obligation to repurchase at a certain price throughout, but the requirement to pay the repurchase price was deferred for the storage period or a shorter period if Settlers elected to pay earlier.
[22] While there was no interest accruing as such, PHC negotiated a repurchase price which was not linked to the market price of the honey, and which gave it a return on investment of approximately 66 per cent over the 13 months. Due to the extensions to the storage period, this ultimately rose incrementally to 86.7 per cent over 18 months. Further, at one stage, PHC negotiated a “success fee” of $500,000,
16 KBL Court of Appeal decision, above n 12, at [77].
although this was subsequently converted into a further increase in the repurchase price.
[23] As noted, Mr Comber also referred me to Hayes Securities Ltd v Bambury.17 In that case, the High Court, considered a transaction involving assignment of agreements for sale and purchase of land for $60,000 with a right of repurchase by a certain date at the same price plus interest. The Court held that the transaction was a loan, that it was a credit contract under the Credit Contracts Act, and that it ought to be reopened as an oppressive transaction under that Act. On appeal, the Court of Appeal found that the only issue was whether the sum of $60,000 was a loan or the purchase price of the agreements. The Court held that the transaction was a loan and “the assignment was but a security — it was in short a mortgage and redeemable accordingly”.18 The Court also found that the sum for which judgment had been entered in the High Court “although arrived at as on a re-opening under the Credit Contracts Act, was equally appropriate in this case to a mortgagee’s account”.19 The Court also considered whether, if the transaction had not been found to be a loan, it was nevertheless a credit contract. The Court found that if the transaction was not a loan, it could not be described as “in substance or effect” a credit contract under s 3(4) of the Credit Contracts Act 1981 because “[i]n those circumstances it was a sale with an option to repurchase”.20 The finding was made on the hypothesis there was no loan. Here, that is the very issue in dispute.
[24] Overall, I cannot say on the evidence before me that I am left without any real doubt or uncertainty as to the nature of the transaction.21 It seems to me that this can only be properly determined after assessment of all the full evidence at trial.
If the transaction was a credit contract, was it oppressive?
[25] Mr Sullivan submits there is ample evidence of prima facie oppression which should be the subject of a hearing with the benefit of expert evidence. He emphasises that the defendants are only required to lay an evidential foundation for oppression,
17 Hayes Securities Ltd v Bambury, above n 8, at 309.
18 At 309.
19 At 309.
20 At 309.
21 Krukziener v Hanover Finance Ltd, above n 3, at [26].
rather than prove at the summary judgment stage that the contract fell outside the reasonable standards of commercial practice. Because this is a commercially novel case and the factors set out in s 124 of the CCCFA will require further evidence and argument by counsel to determine whether the credit contract should be reopened, the threshold to resist summary judgment is reached.
[26] Mr Sullivan expresses surprise over PHC’s need for a second mortgage over Nirvana’s land as security, when an undertaking had already been provided regarding the proceeds of any land sale being applied to repayment of the loan. He says that the Makowhai trustees have their own defences, based on the oppressive conduct in taking the disproportionate security interest as part of the credit contract.22
[27] Mr Comber submits that the underlying idea behind oppression is the contravention of “reasonable standards of commercial practice”.23 In this case, the involvement of an independent solicitor suggests that the contract should not be treated as oppressive.24
[28] Mr Comber submits that, even if the ASP is a credit contract, the ASP and PHC’s lending and tactics were not oppressive. In particular, he submits that the second defendant is an experienced businessman and one of the largest private producers of mānuka honey in New Zealand, who is familiar with transactions like the ASP having sold bulk honey in advance previously. Additionally, the ASP and deed executed on 9 August 2024 by the third defendants (the Makowhai Deed) were negotiated and agreed on an arms-length commercial basis, meaning PHC could not impose terms on the defendants. Mr Comber reiterates that the defendants had the benefit of legal advice before entering into any of the arrangements and were separately represented throughout. PHC had no knowledge that the circumstances of the contracts made them oppressive.
22 Credit Contracts and Consumer Finance Act 2003, s 119(1).
23 Greenbank New Zealand Ltd v Haas [2000] 3 NZLR 341 (CA) at [24], per Tipping J.
24 KBL Court of Appeal decision, above n 12, at [79].
My assessment
[29] I accept Mr Sullivan’s submission that, assuming the arrangement was a credit contract, the security interest taken against the third defendants’ property is to be treated as part of the credit contract under s 119(1) of the CCCFA for the purposes of applying pt 5. The issue is whether the contract, including the contract or arrangement creating or providing for that security interest, was arguably oppressive.
[30]“Oppressive” is defined in the CCCFA:
118 Meaning of oppressive
In this Act, oppressive means oppressive, harsh, unjustly burdensome, unconscionable, or in breach of reasonable standards of commercial practice.
[31]Section 120 of the CCCFA then provides that:
120 Reopening of credit contracts, consumer leases, and buy-back transactions
The court may reopen a credit contract, a consumer lease, or a buy- back transaction if, in any proceedings (whether or not brought under this Act), it considers that—
(a)the contract, lease, or transaction is oppressive; or
(b)a party has exercised, or intends to exercise, a right or power conferred by the contract, lease, or transaction in an oppressive manner; or
(c)a party has induced another party to enter into the contract, lease, or transaction by oppressive means.
[32] Section 124 of the CCCFA sets out a list of factors that the court must, to the extent applicable in the particular circumstances, have regard to in deciding whether to exercise the power to reopen a credit contract.
[33] In KBL Investments Ltd, the Court of Appeal summarised the test for “oppression” thus:25
The test is whether the transaction or some term of it is in contravention of reasonable standards of commercial practice.26 The burden of proving this
25 At [79].
26 GE Custodians v Bartle [2010] NZSC 146, [2011] 2 NZLR 31 at [46].
rests on the person making the allegation, and includes a burden of providing evidence as to what reasonable standards of commercial practice are.27 The role of an independent solicitor will change matters: unless the lender has knowledge of circumstances that render the lending oppressive, a contract on which the borrower had legal advice should not be treated as oppressive.28
[34]As the Supreme Court held in GE Custodians v Bartle:29
In our view, a credit contract should not be seen as oppressive unless the lender has a basis for knowing that to be so. If such a basis exists, however, the lender’s failure to appreciate that the credit contract is oppressive will not excuse it and the contract may be reopened.
[35] Mr Comber submits that the defendants have not discharged their evidential onus, given that prima facie liability has been established, to raise an arguable defence.30 He says the defendants have raised no evidence as to standards of commercial practice which they say have been contravened.31 He submits that in the absence of a sufficiently substantiated defence, the plaintiff cannot be prevented from discharging its onus that summary judgment is appropriate.32
[36] Mr Sullivan relies on Raptorial Holdings Ltd (in rec) v Elders Pastoral Holdings Ltd. In that case the Court of Appeal held in the context of the Credit Contracts Act:33
Nor do we consider that the Court's decision in Haas was intended to make comparative evidence mandatory in all circumstances or to displace, as distinct from assist, the judgment which the Court must exercise under s 11 [the predecessor to s 124 of the CCCFA]. Obviously, standards of commercial practice are likely to be relevant but they must, as Tipping J states, be “reasonable” and if, irrespective of the evidence, those standards are not regarded as reasonable by the Judge, they may be rejected as a valid basis for determining whether the transaction in issue is oppressive. All the circumstances relating to the making of the contract, the exercise of the right or power conferred by the contract and any inducement to enter into the contract in terms of s 11(2)(a) must be considered. Evidence of commercial practice must then be pertinent to those particular circumstances, the particular contract and any inducement. The question whether the finance rate or any amount payable by the debtor under the contract as specified in s 11(2)(b)(i) is oppressive remains open for the trial, but any evidence adduced to show
27 Greenbank New Zealand Ltd v Haas, above n 23, at [24]–[25].
28 GE Custodians v Bartle, above n 26, at [50].
29 At [47].
30 Greenbank New Zealand Ltd v Haas, above n 23, at [19].
31 Mr Comber refers to Westpac New Zealand Ltd v Colley [2012] NZHC 1854 at [33].
32 Mr Comber refers to Export Finance Ltd v Mellsop [2017] NZHC 2908 at [31].
33 Raptorial Holdings Ltd (in rec) v Elders Pastoral Holdings Ltd [2001] 1 NZLR 178 (CA) at [56].
commercial practice, if it is to be helpful, will need to be relevant and specific to the matters contained in subs (2)(a).
[37] In my view, Raptorial is authority for the proposition that, at least in the context of an application for summary judgment, comparative evidence of standards of commercial practice may not be mandatory in all circumstances. This is particularly so where it is plain and beyond rational dispute that a credit contract or a particular term of a credit contract contravenes reasonable standards of commercial practice.
[38] Mr Sullivan argues that the transaction in this case is “commercially novel, and has aspects which are clearly out of the ordinary” and therefore the threshold to resist summary judgment is reached. While elements of the transaction may have been unusual, Mr Matthews’ evidence is that:
A deal like this wasn’t new to me as I had earlier on been involved in a company that did these funding deals by selling bulk honey in advance.
[39] As discussed above, and as contended by the defendants, the transaction arguably has some similarities to a “warehousing agreement” involving land.34 Further, there is no obvious basis in the evidence for saying that:
(a)PHC was not entitled to the original return on investment (66 per cent) to reflect the nature of the transaction and the risks it was taking, indeed this was the return initially proposed by Mr Matthews;
(b)PHC was not entitled to an increased rate of return when the repayment period had to be extended; and
(c)because of its concerns about repayment after several extensions (totalling five months), PHC was not entitled to obtain additional security including in the form of second mortgages over related-party land.
34 Above at [19]–[22].
[40] I do not accept that this is a case where it is plain and beyond rational dispute that the transaction or elements of the transaction contravened reasonable standards of commercial practice.
[41] The defendants contend that “the pool of persons with expertise on the highly unusual nature of this financial arrangement is small”. However, there is an onus on the defendants to put forward some evidence as to relevant standards of commercial practice. The defendants have not put any independent evidence before me as to standards of commercial practice, be that in respect of comparative transactions or any matters in s 124 of the CCCFA. The Court of Appeal has stated, in the context of an application for summary judgment, that there are “difficulties and dangers” in judges taking an “intuitive or impressionistic approach” in determining whether elements of a transaction are arguably oppressive.35
[42] Turning to s 124, Mr Sullivan submits that the evidence before me indicates that several matters in s 124 are engaged which support the defendants’ position. He says that further evidence will be required on these matters at trial for a just and fair decision to be made by the Court.
Circumstances relating to the making of the arrangement – s 124(1)(a)
[43] Mr Sullivan submits that Mr Matthews was under pressure at the time of the transaction and subsequently due to market and other pressures on his cashflow. However, as Mr Matthews acknowledges in his affidavit evidence:
I am not denying there is a loan and that I was very thankful for it when it was given. I am also not denying that I recommended some very generous terms for repayment at the start.
[44] Further, as submitted by Mr Comber, Settlers’ and Mr Mathews’ assumption that global prices of mānuka honey would rise and demand would exceed supply was incorrect. This made it more difficult for Settlers to repurchase the honey at the end of the storage period, but that was not the fault of PHC. He submits that oppression
35 Greenbank New Zealand Ltd v Haas, above n 23, at [25] and [29].
under the CCCFA does not arise because Settlers was “in a position of hardship, even if that hardship was extreme”.36
Particular characteristics of debtor — s 124(1)(d)
[45] Mr Sullivan submits that Mr Matthews is a farmer, with little education, who is not well-versed in obscure business matters like the numerous and changing agreements PHC advanced.
[46] However, as submitted by Mr Comber, it is apparent that Mr Matthews is an experienced businessman and one of the largest private producers of mānuka honey in New Zealand. As noted above,37 Mr Matthews acknowledges in his evidence that he is familiar with deals like the subject transaction.
Independent legal advice — s 124(1)(f)
[47] Mr Sullivan submits that, despite the defendants having a solicitor involved, the relationship was one-sided because the terms were drafted by PHC’s lawyers and variations inflated the buy-back price beyond market value.
[48] The evidence is that the defendants were legally represented throughout and there were exchanges between the parties’ respective solicitors on all relevant documentation. Mr Comber submits that PHC did not and could not impose or unilaterally alter the terms of the ASP. Settlers either suggested the variations or entered into them on an arms-length commercial basis, after taking legal advice. Mr Comber emphasises that the presence of independent solicitors is material; it is important that business-people can freely contract especially when in the receipt of competent legal advice.38 Further, none of the defendants raised issues about any of the terms of the ASP, the variations or the Makowhai Deed prior to March 2025.
[49] I accept that the fact that the defendants received independent legal advice is material in this case. There is no obvious basis in the evidence before me to suggest
36 Colley v Westpac New Zealand Ltd [2013] NZCA 57 at [37].
37 At [38].
38 KBL Court of Appeal decision, above n 12, at [79]; citing GE Custodians v Bartle, above n 26, at
[50]and Greenbank New Zealand Ltd v Haas, above n 23, at [25].
that PHC were not entitled to assume that the defendants received independent and competent advice.39
Whether the terms allowed the defendants to be reasonably able to comply with their obligations and are reasonably necessary to protect the interests of PHC — s 124(1)(l)
[50] Mr Sullivan submits that the transaction was not a standard commercial agreement as, unless the market improved, the risk and loss fell entirely on Settlors and the guarantors. The asset was plummeting in value, despite the loan repayment continuing to rise in circumstances where Mr Matthews had no choice but to accept PHC’s requests. The buy-back price was effectively increased as a form of penalty interest.
[51] However, as noted above, the fact that the global price of mānuka honey did not rise as expected was not the fault of PHC. Further, as submitted by Mr Comber, the increasing repurchase price was not oppressive because it was agreed in consideration for PHC agreeing to extend the storage/repayment period. The additional time was of value to Settlers in allowing it to attempt to finalise third-party transactions to generate the funds necessary to pay the repurchase amount.
Length of time to remedy any default — s 124(1)(m)
[52] Mr Comber submits that PHC brought this proceeding after persistent and ongoing breaches by the defendants to pay the amounts owing. PHC only took legal action after attempting to make alternative arrangements throughout January to October 2024 and is only seeking recovery of the amounts contractually owed.
[53] I accept that the defendants have had sufficient time to remedy the default or otherwise resolve the matter with PHC prior to the issue of proceedings and subsequently.
39 GE Custodians v Bartle [2010] NZSC 146 at [47]-[50].
Actions by PHC in relation to enforcement of, or recovery under, the arrangement/other matters — s 124(1)(o) and s 124(1)(p)
[54] Mr Sullivan submits that the intermingling of commercial affairs requires factual enquiry at trial, as issues of credibility arise. In particular, he refers to the role of PHC’s agent, Mr Unkovich. Mr Matthews give evidence that Mr Unkovich was dealing directly with him regarding a potential deal with NZ Organics and potential land sales, and also had direct contact with the Settlers lawyer. It is suggested by Mr Matthews that PHC, through Mr Unkovich, has been attempting to leverage its position as lender to take over Settler’s business or obtain the land over which it holds a second ranking mortgage. Mr Matthews also has concerns about PHC’s contact with Vitol Asia Pty Ltd (Vitol) who hold first ranking mortgages over the Nirvana land and Makowhai Trust land.
[55] However, PHC refutes that it wants to take over Settlers’ business or take ownership of the relevant land and says these are baseless allegations that are not consistent with contemporaneous documents and should not be accepted on a summary judgment application.40 PHC emphasises that it only interested in obtaining payment of the repurchase price and has not, to date, taken steps to enforce its security interests. Further, to the extent that PHC has spoken to Vitol, this was because the value of PHC’s security interest is contingent on Vitol’s first ranking mortgage, and it says there is nothing untoward or unusual about PHC confirming Vitol’s position. PHC says that it informed Settlers and Mr Matthews by way of an email dated 23 September 2024 from its solicitors to the defendants’ solicitors of its intention to discuss these matters with Vitol. PHC refutes Mr Matthews’ assumption that PHC said to Vitol that it will enforce its mortgage by taking over the land or otherwise sought Vitol’s support in doing so. Mr Comber also submits that, as a matter of law, PHC cannot use its second ranking mortgage interests to take over the land.
[56] I note it is apparent from the evidence that it was Mr Matthews who, in early September 2024, first proposed (as a potential fifth variation) that PHC might acquire some land to extinguish Settlers’ liability to pay the repurchase price. PHC says that the proposal was that PHC would be entitled to use proceeds from sale of the land,
40 Mr Comber refers to Mount Grey Downs Ltd v Pinot Properties Ltd [2018] NZHC 3094 at [12(e)].
assuming any remained after the first ranking mortgage holder, Vitol, was paid in full, to obtain payment of the repurchase price, with any amount remaining to go back to Settlers. In the end, the parties were unable to reach final agreement on the terms of the proposed fifth variation.
[57] On the basis of the material before me, I am not satisfied that the points raised by Mr Sullivan on behalf of the defendants in this section give rise to an arguable case that PHC has exercised, or intends to exercise, a right or power in an oppressive manner.
Conclusion as to oppression
[58] Overall, I am not satisfied that there is sufficient evidential foundation for oppression to enable it to be regarded as arguable, either on the basis that the transaction itself was oppressive or on the basis that PHC has exercised, or intends to exercise, a right or power conferred by the transaction in an oppressive manner.
Is summary judgment in respect of liability only under r 12.3 appropriate?
[59] Mr Sullivan submits that, in respect of Settlers and Mr Matthews, it is open to me to give judgment on liability only, on the basis that quantum can be resolved between the parties, or determined after a quantum hearing. PHC also apply, in the alternative, for summary judgment against all the defendants on liability and for directions as to trial on the issue of quantum.
[60] As noted above at [13], a “clear dichotomy” between the issues affecting liability and damages is required to grant judgment only on liability. In this case, I do not consider that there is such a clear dichotomy because the issue of oppression and the reopening of a credit contract potentially go to both liability and quantum.41
[61] In any event, I have found that the defendants do not have a reasonably arguable defence based on oppression. This means that the transaction cannot be reopened for the purpose of assessing liability or quantum. Quantum can be determined on basis of the terms of the ASP and the variations.
41 See Credit Contracts and Consumer Finance Act 2003, s 127.
[62] Overall, on the basis of the material before me, I am satisfied that the defendants do not have a reasonably arguable defence to PHC’s claim in respect of liability or quantum.
Result
[63] The plaintiff’s application for summary judgment against each of the defendants is granted.
[64] Within five working days of the date of this judgment, counsel for the plaintiff is to file a memorandum setting out the specific orders now sought against the defendants in terms of the repurchase amount, legal costs and default interest and whether judgment is sought against the defendants jointly and/or severally. Counsel for the defendants will then have a further five working days to raise any issues with the specific orders sought. If no issues are raised on behalf of the defendants, then final orders will be made in accordance with the memorandum of counsel for the plaintiff. If issues are raised then, if necessary, I will convene a telephone conference to discuss and resolve or determine any issues before making final orders.
[65] In the circumstances, my preliminary view is that the plaintiff is entitled to costs on a 2B basis and reasonable disbursements. However, if any party disagrees with this preliminary view, then memoranda may be filed not exceeding three pages (excluding costs schedules) and costs will be determined on the papers.
Associate Judge Skelton
Solicitors:
Simpson Grierson, Auckland for Plaintiff/Applicant
CR Law, Palmerston North for First to Third Defendants/Respondents
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